H1’2022

September 2022
The Redseer story on the Indian eB2B Retail Market has
been narrated through below key themes
GT Opportunity- India’s retail market with ~13 Mn General Trade (GT) stores remains highly fragmented
and inefficient; however, GT will continue to drive it in the next 10 years , Easy accessibility in the remotest
of the areas in the country

eB2B Value Proposition for Retailers and brands- eB2B emerging as a disruptive opportunity to serve brand and
retailer needs. Driven by strong problem solving on the most pressing retailer issues, retailers keen to shift more
wallet share to eB2B

Massive eB2B growth potential- $5 Bn eB2B market in 2021 could potentially grow to $90-100 Bn by CY30
on the back of penetration led growth (1% of B2B retail in 2021 to ~8% in 2030P) enabled by robust retailer and
brand adoption

Credit, supply chain and Feet on Street to be winning levers- eB2B players are solving for retailers' supply chain
challenges via highly streamlined operations . While high impact and efficient FoS operations are being achieved
through Hybrid demand generation (FoS-led + self-serve) model

Multi-category national players well placed to win - Market has multiple players , with some focusing on limited
categories and regions while others are multi-category nationals. Multi-category nationals have access to larger
TAM and reach

Unit economics on path to profitability- eB2B platforms are projected to reach healthy EBITDA level in the
steady state, especially the ones with multi-category play. Multi-category player’s better profitability potential
will be driven by multiple favorable factors

© Redseer 02
In India, Unorganized GT channel drives the bulk of retail and
will continue to drive it in the next 10 years (unlike the global
markets)
Retail Market Split by Channel Global Benchmarks – Share of General Trade
USD Bn, % of Retail Market, 2021,2030P USD Bn, % of Retail Market, 2021,

CAGR
Absolute growth

Country Share of General Trade

(%, 2021)

USA 10-15%

17% (334)
China 35-40%

13% (259) UK 20-25%

22%
$279 Bn
Indonesia 70-75%
Online 6% (54)
Organised B&M 10% (83) 13%
$176 Bn
India 84%

4%
$679 Bn 70% (1,407)
84% (728)
Barriers to organized B&M1 adoption in India:
Deep, fragmented country with 8k+ towns and 665k villages
General Trade
High operations (rentals for stores and warehouses) and, marketing costs

Complex regional diversity leading to demand for localized experience

2021 2030P FDI regulations in multi brand retail and restrictions for foreign retailers

Note(s): 1. Organised B&M – Organised Brick and Mortar includes all retailers with more than one retail store

Sources(s): Expert Inputs, Redseer Research, Redseer IP

© Redseer 03
A large pool of ~13 Mn retailers drives this GT opportunity,
majority of which are small-scale (class C and D) and
concentrated in the tier 2+ markets
Distribution of GT Retailers by Tier and Class
2021
8% 10% 82%
Total retailers: ~13 Mn
3% 2% 1%
Traditional Big
Retailers Class A: A store owned by traditional businessmen and
(CLASS A) having a size of >200 sq. feet. This store has an average
~1% 22%
daily revenue of INR 25000+.
30%
34%

Class B: A store owned by first-generation movers to big

Enterprising cities and having a size of 100-200 sq. feet. This store has
stores an average daily revenue of INR 15000-25000.
(CLASS B)
~24% 37%

33%
Class C: A store owned by first-generation movers to big
30% cities and having a size of 100-200 sq. feet. This store has
an average daily revenue of INR 6000-15000.
Aspirational
stores
(CLASS C)
~36% Class D: A store owned by a small family and having a size
of 50-100 sq. feet. This store has an average daily revenue
of INR 6000.
40%
35%
33%
Old-school
Conservative
stores
(CLASS D)~39%

Metro Tier 1 Tier 2+

Source(s) : Redseer Research, Redseer Analysis, Redseer IP

© Redseer 04
Key advantage of GT- Easy accessibility in the remotest of the
areas in the country

Accessibility – Retailers per sq. km x Store Density (per ‘000 people) 10-25% 60-75% >75%
2021

Size of the bubble indicates share of General Trade

15

14

13 Indonesia

12
Store Density (per ’000 people)

11

10

9 India

8 UK
7

6 Vietnam
Brazil
5

3 USA

0
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5

Retailer/sq Km

Note(s): 1. ‘udhaar’ is informal credit extended by retailers to end-consumers

Source(s) : Redseer Research, Redseer Analysis, Redseer IP

© Redseer 05
GT channel also stronger ability to serve the Tier 2+ markets
which are indexed more towards the grocery category

India Retail and Grocery Market India Grocery Market – Channel x City Tier
2021, USD Bn 2021, USD Bn

865 Grocery, which covers the bulk of India’s retail, is more

unorganized than the rest of retail and dominated by Kiranas
52 51 459
Online 1% 3% 1%
Others 5%
35% (1%)
14%
Organised B&M 15%
(5%)

96%
65% 85%
Grocery
80%
General Trade
(94%)

Overall Retail

Metro Tier 1 Tier 2+

9% 9% 82%

Source(s): A. RedSeer IP, RedSeer Analysis

© Redseer 06
Key advantage of GT- Easy accessibility in the remotest of the
areas in the country
Indian GT B2B Retail Market Growth
USD Bn, 2021, 2025P, 2030P
CAGR Examples

Cash & Carry has been unable to

eB2B
grow/succeed given it does not solve
for the poor access and convenience in $1,195 Bn
eB2B
the GT procurement value chain
~8%
Cash & Carry <1%
Distributor-led
7%
Unorganised 16%
(Branded & 9% $866 Bn
Unbranded)
2.5-3.5% 25-30%
<1%
50-57% 15%
Cash & Carry2
$619 Bn 3%
<1%
1%
14%
8%
76%
11%

82%
Brand/ Distributor Led
5%

85% 8%

2021 2025P 2030P

Note(s): 1 USD = INR 75 2. Reliance Cash and Carry is not operational now and it has been converted into fulfilment centres for their eB2B business

Source(s): Redseer Analysis, Secondary Research

© Redseer 07
eB2B market to grow to $90-100 bn GMV by CY30, riding on the back
of massive penetration- led growth headroom for India vs peers
eB2B Penetration India eB2B Market (GMV)
% of overall B2B retail, 2021 CY 21- 30P, USD Bn
CAGR

25-30%
China 10-15% 90-100

UK 7-10%
25-30

United States 4-7%

50-57%

Brazil 1-5%
Massive growth
headroom for India
India <1%

Indonesia 0.6%

2021 2025P 2030P

Vietnam 0.2%
Penetration of
eB2B in GT B2B <1% 2.5-3.5% 7.5-8%
market

Note(s): 1 USD = INR 75 2. Reliance Cash and Carry is not operational now and it has been converted into fulfilment centres for their eB2B business

Source(s): Redseer Analysis, Secondary Research

© Redseer 08
Given low eB2B adoption in lower city tiers and small stores

Key:
India eB2B – % retailers penetrated (eB2B)
Unorganized Market Retailer Penetration by City and Type
2021 0% 40%
Phases of eB2B Journey
B2B Retail GMV distribution by retailer type and city tier
eB2B Adoption happens in phases;
The longtail of retailers are often the
last but often the stickiest (as seen in
other mature market e.g., China)

Small Phase 1 – Adoption in:

Type D/E
Big cities Large/mid-size retailers
Early adopters, digital savvy
Mom & Pop Stores
Monthly turnover: Phase 2 – Adoption in:
Up to INR 25000
Small retailers in Big cities
Expansion to tier 1 and smaller cities

Phase 3 – Adoption in:

Medium Smaller cities

Type B/C Small retailers

Large Traditional Large

Type A Stores
Monthly turnover:
More than INR 25000

Metro Tier 1 Tier 2+

Source: RedSeer Analysis

© Redseer 09
eB2B players are also capturing value by solving the key
challenges of brands/manufacturers

Key Challenges Across Brands/Manufacturers

Descriptive Top challenges Lowest Degree of Pain Point Highest

Key Challenges Established Brands Emerging Brands Unbranded Manufacturers

Low Penetration of
Long tail products

Price Discrepancy

Limited Marketing
effectiveness

Low Fill Rates

Limited Reach

Lack of Secondary
sales data insights

Demand Prediction

High Cycle Time

Limited Retailer Adoption

Sources(s): Expert Inputs, Redseer Research, Redseer IP

© Redseer 10
Multiple eB2B players have come up to serve this growing
demand; largest players are the multi-category nationals

Market Models in eB2B

Descriptive. Bubbles represent key players in the ecosystem Retailer Focus2 Wholesaler Focus3

3.Vertical National 1.Multi-category National

Presence across the country, Othre Players

including Tier2+ cities, small National
towns and rural areas

Operates in limited regions/

geographies (generally Regional
restricted to Metros and Top
4.Vertical Regional 2.Multi-category Vertical
Tier 1 cities)

Vertical Multi-category

Focusing on limited/specialized Presence across multiple retail

retail categories categories
(covers < 3 product categories) (covers > 3 product categories)

Note(s): 1. JioMart includes ‘Netmeds Wholesale’ 2. Retailer focus –>50% of revenues coming from retailers 3. Wholesaler focus ->50% of revenue coming from wholesalers
* Other players includes players like Jiomart, Ajio Business, Elastic Run, Dealshare etc

Sources(s): RedSeer Approach

© Redseer 11
Udaan is the clear leader in the retail eB2B space

eB2B retail players1 – GMV Market Share

USD Bn, 2021

Other
eB2B
Players

62%

Udaan 46%
19%

Retailer-led Wholesaler
eB2B eB2B
Overall eB2B

* Other players includes players like Jiomart, Ajio Business, Elastic Run, Dealshare etc

Source(s): Redseer Analysis

© Redseer 12
Udaan and JioMart are the most well-known and preferred
platforms among the retailers for future eB2B purchases

Which of the following platforms are you aware of ? Which of the following Online B2B Aplatforms are you
TOMA + Unaided Recall likely to increase spend on?
% of respondents, Non-Users of the respective platform % of respondents, N caries by cut

Udaan Udaan 53%

35%

Jio Mart 33% Jio Mart 41%

Other players

Other players

* Other players includes players like Ajio Business, Elastic Run, Dealshare amongst others

Source(s): Retailer Survey, RedSeer Analysis

© Redseer 13
GT retailers say that eB2B platforms have the ability to
effectively resolve the pressing pain-points faced by them

What are the challenges you face when purchasing from the offline channels and eB2B channels? eB2B channels
Offline channels
% of respondents, N=1223

Amongst eB2B players Udaan

emerged as players who solved the
retailer feedback most effectively
60% (compared to key peers) per the
survey

35%
40%
37%
36%
23%
29%
23%
16% 22%
20%
20%
20%

8%

5%
0%
Higher Price No credit/ Low quality Less varitety Untimely Frequent Difficulty in Dealing with Unavailability Non-consistent
price transparency pay later of products of products/ delivery products placing an Multiple of on-the-field productQuality
option brands stockout order distributors/ support agents
wholesalers

Source(s): Retailer Surveys, Interviews (N = 1223), Redseer Analysis

© Redseer 14
Thus GT retailers are bullish about increasing their eB2B spend in
the near future (at the expense of other channels available to them)

How has the spend on following purchase channels In 2022, how do you expect the spend on eB2B platforms
evolved over the past year? to evolve from current levels?
%, N= 1223 %, N= 1223

Increase Significantly (50%+) Increase Slightly (10-50%+) Stay at same level (+/-10%) Decrease Slightly (10-50%+) Decrease Significantly (50%+)

3% 4% 3%
13% 16%
16%
19% 20%

30%
33%

Unorganized Brand/Distributor Cash & Carry eB2B eB2B

Wholesaler Led

Source(s): Retailer Survey, RedSeer Analysis

© Redseer 15
Credit, efficient & high quality supply of products and FoS
assistance are crucial to eB2B’s solution to effectively serve the
retailers and win the market
What are the challenges you face when purchasing from the offline channels? Why did you not register on any of the
% of respondents, N caries by cut online B2B platforms?
% of non-eB2B users, N caries by cut

Credit Access Class A & B retailers Supply Chain & Quality Issues Sales agents never approached for registration
have availability of
credit, but feel that
Overall Quality Issues Overall
50% their credit limits can 46% 51%
(N=1223) (N=216)
be increased

Metro 57%
Class A Delayed Delivery (N=68)
34% 42%
(N=114) and Lack of access

Tier 1&2
Class B+C Frequent product (N=75) 44%
50% 41%
(N=804) stockouts

Tier 3+
(N=73) 52%
Class D 54%
(N=305)

“Taking credit from online B2B platforms “I can’t track my order or communicate “I do not have any knowledge of any B2B
is very convenient and systematic. I can with agents of local suppliers easily. Local Platform because no FOS approached
clear my due credit with the touch of a distributor doesn’t inform me about me for onboarding onto their platform
button on the app” unavailability of stock on time which and I continued procuring items from
impedes my sales” local channels”
-Class B Fashion Retailer -Grocery Retailer -Tier 3+ Retailer

Sources(s): Retailer Surveys, Retailer IDIs, Redseer Analysis

© Redseer 16
eB2B players are solving for retailers' supply chain challenges via
highly streamlined operations
Backward
eB2B Bridging Supply Chain Inefficiencies Integration Warehousing Fulfilment

Branded Traditional Retail Value Chain

Brands Distributors/Stockists Wholesalers Traditional Retailer Supply Chain Inefficiencies

FMCG , Electronics, W3
W2
Fashion, GM D1 D2
W1
Slower and expensive procurement
Low visibility, demand predictability
W5
D3 W6 W7 and marketing inefficiencies
Lack of access to credit
Limited reach and access
eB2B

Unbranded Traditional Retail Value Chain

Farmers Brokers/ Agents Millers Brokers/ Agents APMCs/ Mandis Wholesalers Traditional Retailers
Unstandardized quality & price
B2 B3 B2 B3
B1 B1 W5 Multiple intermediaries leading to
M1 M2 A1 W6
Staples/ Fresh W3 high cycle times
B7 B8 B7 B8
W2 Lack of reach and access due to
M3 A2
B4
B5 B6
B4
B5 B6 W1 poor logistics facilitation
W4
High Wastage/Leakage

eB2B

Weavers/ Manufacturers Traders/Agent Wholesalers Traditional Retailers

Slow, wholesaler dependent
procurement
T3 T7 W3
Lifestyle/ T2 W1
W2 Lack of credit limiting retailer
General T1 T3 potential
W5
Merchandise T4 T6 W6 W4 Price discrepancies and issues with
T5
vendor reliability & quality

eB2B

Source(s): Redseer Research, Redseer Analysis

© Redseer 17
While high impact and efficient FoS operations for retailers are
being achieved through Hybrid demand generation (FoS-led +
self-serve) model
Case Study- How role of FOS evolves over time (Udaan example)
Descriptive

Relationship Management

Issue Resolution
Developing lasting business
Retailer’s engagement with the eB2B platform

relationships through regular

visits, information dissemination
& trust-building

Handholding Prompt resolution of queries/

issues faced by initial users to instil
confidence that enables them to
use the platform independently
Onboarding

Help with documentation, KYC-

registration, other operational
formalities and first order
placement
Identifying target retailer base,
creating awareness about merits
of using a B2B platform & build
interest.

Operational responsibilities Managerial responsibilities

Time

Sources(s): Expert Inputs, Redseer Research, Redseer IP

© Redseer 18
For brands, eB2B players are helping them by providing standard
distribution solutions with a wide retailer reach + other key
value-added services
Challenges faced by Brands & Unbranded Manufacturers and their solutions by eB2B players
Descriptive

Limited Marketing effectiveness/

Low Penetration of Long tail products Price Conflicts / Discrepancies opportunities

Awareness generation + demand shaping through Eliminates intermediaries (stockists, sub-stockists, In-app marketing and wider retailer reach
merchandising on app and on-ground market wholesalers etc.) preventing price discrepancies
Range selling through FoS
executive Price visibility and transparency
Specific product portfolios can be designed Price standardization
for the channel
Targeted incentives and schemes to push
NKVIB salience

Low fill rates Limited/Restricted Reach Lack of Secondary(A) sales data Insights

Allows more frequent app-based/FOS Increasing reach and visibility in regional market Access to data analytics, secondary and
assisted ordering with small quantities tertiary data
Reduces stockouts for KVIs New city expansion is convenient in eB2B Availability of data at pin code/ SKU/ retailer level

Doorstep and next day delivery facility ensuring Dedicated FoS team across regions New product launch testing through platform
high inventory turnovers
Superior warehousing solutions

Demand Prediction High Cycle Time Limited Retailer Adoption

Availability of data at pin code/SKU/retailer level Direct sourcing from brands/ manufacturers Joint business planning including packaging,
promotion and communication strategy to drive
Warehousing and Logistics solutions to Direct reach to retailers better visibility and demand uptick
prevent stockouts
Logistics solutions for efficient procurement Credit financing for smaller retailers
increasing retention

Note (s): (A) Secondary Sales: Distributor / Wholesaler to retailer sales; (B) Non Key Value Items
Source(s): RedSeer Analysis, Brand Expert Interviews
© Redseer 19
Especially for emerging brands, eB2B provides a solution to quickly
expand their currently low Tier 2+ share of business; such brands
will drive surge in marketing $ spent on eB2B in future
India Overall Retail and Emerging Brands - City Tier % of Business Marketing Spends by Brands – Traditional vs eB2B channels
2021, % of Business Pre-eB2B vs 2021 vs 2030P, % of marketing spend
towards distribution/retailers

Metro 13% eB2B

5-15%

Tier 1 12% 35-45%

20-30%

20-30%

Tier 2+ 75%
100%
Traditional 75-90%
Channels 70-80%
Headroom to
meaningfully improve
30-40%

Overall India Retail Emerging Brands

Selected Examples

Pre-eB2B 2021 2030P

Source(s): RedSeer Analysis, Brand Expert Interviews

© Redseer 20
Basis the strong value creation for retailers as well as brands, eB2B
players could drive a paradigm shift in India’s retail landscape by
2030- creating a large and sustainable business for themselves in
this process
eB2B Enabled Retail of the Future – Summary
Descriptive

Shift from unorganized Rails for emerging

-> organized trade brands to scale in India

High RoI, cash-efficient

and profitable eB2B
businesses at massive scale

All these factors enable eB2B

players to be profitable at scale

De-facto channel for Unparalleled trove of

brand marketing & retailer insights &
ad spend data intel

Source(s): RedSeer Analysis, Brand Expert Interviews

© Redseer 21
eB2B platforms are projected to reach healthy EBITDA level in the
steady state, especially the ones with multi-category play…

Unit Economics – eB2B Grocery only, eB2B Discretionary only and eB2B Multi-category at Scale
Current-2021, At Scale- 2030P

Parameters eB2B Grocery Vertical eB2B Discretionary Vertical eB2B Multi-category

(Grocery (2/3rd) + Discretionary (1/3rd))

Gross Margins (Current) 3-5% 7-9% 4-7%

Gross Margins (At-scale, 2030P) 6-8% 12-15% 10-11%

Only achievable through

Supply Chain Costs 1-3% 5-7% 2-3% Multi-category play with
2/3rd grocery

Other Overheads (incl. Sales,

3-4% 4-5% 3-4%
credit and corporate overheads)

EBITDA Margins before VAS Revenue 2-3% 3-4% 5-6%

Value added Services Revenue

(incl. revenues from Marketing, 1-3% 2-3% 2-3%
Data Insights and Merch Income)

EBITDA Margins post VAS Revenue 3-5% 5-7% 6-8%

Getting the category mix is critical to boost margin profiles for eB2B players

Sources(s): Expert Inputs, Redseer Research, Redseer IP

© Redseer 22
…in-line with the organized retail benchmarks
Indicative Scale

Favourable Unfavourable
Profitability across Players
FY 22- Dmart, FY 21 – Reliance Retail, Metro Cash & Carry, eB2B Multi-category (Current) – 2021, eB2B Multi-category (at Scale)- 2030P

eB2B Multi-category eB2B Multi-category Dmart Reliance Retail

Particulars Metro Cash & Carry
(Current, 2021) (At Scale, 2030P) (Modern Trade) (Modern Trade)

Gross Margin
(% of Revenue 4-6% 10-11% 14.5% 11.1% 10.4%
from Ops)

VAS Revenue
(% of Revenue 1-2% 2-3% 0.3% ~1% 0.5%
from Ops)

Supply chain Costs

(% of Revenue 3-4% Higher because 2-3% 2.5% 2.6%
of G&A expenses
from Ops) and people
investments for
the future, which
9.3%
Other Costs will reduce at
(% of Revenue 8-10% scale. 3-4% 4.2% 4.7%
from Ops)

EBITDA Margin
(% of Revenue (4-6%) 6-8% 8.1% 4.9% 1.6%
from Operations)

Note: 1. Other Income has not been considered in EBITDA calculations 2. Cell colouring in the table has been done in each row 3. Rental costs have been included in Other costs

Source(s): Primary Research, Player Annual Reports, RedSeer Analysis

© Redseer 23
Multi-category player’s better profitability potential will be driven
by multiple favourable factors
Indicative Scale

Favourable Unfavourable
Unit Economics – eB2B Grocery only, eB2B Discretionary only and eB2B Multi-category at Scale
Current-2021, At Scale- 2030P

eB2B Grocery eB2B eB2B Multi-category

Parameters Discretionary (Grocery (2/3rd) + Why will multi-category eB2B players win?
Vertical
Vertical Discretionary (1/3rd))

Gross Margins (Current) Overall gross margins will improve because of :

Direct sourcing and direct inbounds
Improvement in mix, Private Label Play
Exclusive Brand Partnerships
Gross Margins (At-scale, 2030P) Better Negotiating LeverageOverall, multicategory
players will be a blend of grocery and discretionary
and hence at a decent level

A multi-category play is poised to win as grocery

Supply Chain Costs will help drive tonnage, demand predictability
and hence help optimise supply chain costs
Higher sales and distributor push is required for
Other Overheads
discretionary category because of variability in d
(incl. Sales, credit and
emand , which is optimised by a more predictable
corporate overheads)
category like grocery

EBITDA Margins before Grocery optimises costs and discretionary

VAS Revenue boosts margin profiles

Value added Services Revenue A multicategory play leads to wider reach and
(incl. revenues from Marketing, Data adoption by retailers and hence, such eB2B platforms
Insights and Merch Income)
have more granular data insights and are therefore in
a better position to monetize the same.
EBITDA Margins post VAS Revenue

Getting the category mix is critical to boost margin profiles for eB2B players

Sources(s): Expert Inputs, Redseer Research, Redseer IP

© Redseer 24
Driven by the above factors, eB2B is likely to operate with high cash
efficiency in the steady state
Procurement Flow
eB2B Platform – Working Capital
Cash Flow
Process and Key Factors eB2B Platform
Credit Flow
Descriptive

3P/Marketplace
Model

No Inventory
No Payables (float basis)

Brand/
Manufacturer Retailers

Payable Days (Receivables for

the brands)– Number of Receivable days (Payables
Days in which payment is made for the Retailers) – Days for
to the brands for an order which credit is extended
to the retailers

1P/Inventory
Payable Days are likely to offset inventory Model No receivables for players e.g., udaan
days for eB2B players, given the strong that leverage their financial arm to
tech-enabled demand predictability, Inventory Days –Number of provide to fund the credit for retailers.
warehousing and cataloging. days which a company takes
to turn its inventory

Note(s):

Source(s): RedSeer Research & Analysis

© Redseer 25
Certain specific players are well positioned to do well

Lever of leadership on eb2b- case example Udaan

Provision of Credit: Driving higher collection and better underwriting efficiency, with the help of a captive credit arm

Captive supply chain solution: inclusive of backward sourcing, warehousing and fulfillment - enabling improved fill rates,
faster deliveries, lower supply chain costs

Hybrid demand generation: Feet-on-street (FoS) to assist with initial demand generation, followed by self-serve. FoS role
gradually evolves into that of a relationship manager, to ensure better engagement

Higher quality product - inclusive of features such as vernacular, new launches and deals, easy navigation
and easy credit provision

Source(s): RedSeer Research & Analysis

© Redseer 26